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Pani-rosa [81]
3 years ago
8

Consider the following information for three stocks, Stock A, Stock B, and Stock C. The returns on each of the three stocks are

positively correlated, but they are not perfectly correlated. (That is, all of the correlation coefficients are between 0 and 1.)
Stock - Expected Return - Standard Deviation - Beta
Stock A - 10% - 20% - 1.0
Stock B - 10 - 20 - 1.0
Stock C - 12 - 20 - 1.4
Portfolio P has half of its funds invested in Stock A and half invested in Stock B. Portfolio Q has one third of its funds invested in each of the three stocks. The risk-free rate is 5%, and the market is in equilibrium.
What is the market risk premium RPM?
a. 4.5%
b. 5.0%
c. 6.0%
d. 5.5%
e. 4.0%
Business
1 answer:
hichkok12 [17]3 years ago
4 0

Answer:

b. 5.0%

Explanation:

For this question, we use the Capital Asset Pricing model (CAPM) formula that is shown below:

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

where,

The Market rate of return - Risk-free rate of return) is also known as the market risk premium

So, for stock A, the market risk premium is

10% = 5% + 1.0 × market risk premium

10 - 5% = 1.0  × market risk premium

5% ÷ 1.0 = market risk premium

So, the market risk premium is 5.0%

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​Martinville, Inc. earned revenues of $ 17,000 and incurred expenses of $ 7,000. The company declared and paid cash dividends of
vladimir1956 [14]

Answer:

$10,000

Explanation:

A company's income is either shared out as dividends or kept in as retained earnings. Therefore, the total of retained earnings and dividend paid out is the net income. This is the amount that will reflect in the income statement. In other words, income is calculated first before dividends or retained earnings are declared.

For ​Martinville, income will be calculated first before dividends are paid. Net income will be

=revenue - expenses

=$17,000 -$7,000

=$10,000

Balance in the Income Summary account was $10,000

4 0
3 years ago
Which of the following is not an example of<br> institutional consumers?
Murljashka [212]

Answer:

which of the following but where are the following broo

4 0
2 years ago
The degree to which team members interact with and rely on other team members for the information, materials, and resources need
Mariulka [41]

Answer:

task interdependence is the correct answer.

Explanation:

The degree to which team members interact with and rely on other team members for the information, materials, and resources needed to accomplish work for the team is known as task interdependence.

The goal of task interdependence  is to alleviate the problems that arise when various assignments overlap and become the potential for disagreement.

Task interdependence within the team is an extent where the team members should communicate with each other to achieve their responsibilities and tasks.

Knowledge of task interdependence benefits company owners grasps how various branches and team members depend on the performance of each other.

5 0
3 years ago
If a stock split occurred, when calculating the current year's EPS, the shares are treated as issued:A. At the end of the year.B
son4ous [18]

Answer:

Correct answer is (C)

Explanation:

At the beginning of the year.

Earnings per share (EPS) is the portion of profit earned by the company that is allocated to each outstanding share of its common stock. It is determined by taking the difference between a company's net income and dividends paid for preferred stock and then divided by the average number of shares outstanding. So if stock split occurred when calculating the current year EPS, the shares are treated as issued at the beginning of the year.

7 0
2 years ago
A production possibilities frontier can shift outward if a. resources are shifted from the production of one good to the product
Eduardwww [97]

Answer:

d. there is a technological improvement.

Explanation:

a) replacing production of one good in favor of another will be a move across the PPF

b) abandon inefficient production will bring the production to the PPF from a place below it.

c) has no relationship it will simply put inflationary pressure.

<em>d) the technological improvement will make a better use of the factor thus, increasing productivity and making possible more production with the same amount of materials.</em>

7 0
3 years ago
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